Recession was deeper than feared

Britain's recession was even deeper than first estimates suggested, figures show.

The economy shrank by 6.4pc from its peak in 2008 to its trough at the end of 2009, more than the previous estimate of 6.2pc, according to the ONS figures. That made the UK an extra £3bn poorer at the stroke of a pen.

By contrast, the 1979-1981 slump, overseen by then chancellor Geoffrey Howe, saw the economy shrink by 5.9pc.

According to revised figures from the Office of National Statistics,
the economy was slowing in 2007, long before anyone realised. The
recession that followed was even more brutal than any in recent memory.

The revelation came as one of the Bank Of England's policymakers
warned that public spending cuts risk tipping the country back into
recession.

Adam Posen, a member of the rate-setting Monetary Policy Committee,
said: 'There is going to be a lot of drag on the economy, with the
problems of the eurozone and the public sector contraction in the UK.'

A shorter-lived downturn in the early 1990s was marked by sloughing
property prices and an economy that lost 2.5pc in value. Positive news
was hard to find amid the revised data. First quarter economic growth
was unchanged, with severe weather limiting the advance in economic
output to just 0.3pc.

Export numbers were revised down, showing a 1.7pc drop in the first quarter, while imports jumped by 1.6pc.

The current account swung to a £9.6bn deficit in the first three
months, compared to a £0.5bn revised surplus in the final quarter of
2009.

Virtually the only area of strong growth in the first three months
came, rather unsurprisingly, in the guise of higher state spending as
Labour geared up to fight the May General Election.

Economists called on the coalition government to ensure that the
recovery is broad and deep, taking in not just financial services but
manufactured goods exported by leading British firms.